Entoro Capital provides advice and services to a wide range of established and growth-oriented businesses around the world. Recent regulatory changes have increased the maximum capital raise limit for Reg CF Issuers from $1 million to $5 million resulting in sweeping repercussions on the early-stage capital raise ecosystem. COVID-related dynamics in 2020 drew quality Issuers away from traditional capitalization channels and toward crowdfunding. Seed, angel and early-stage Venture Capital activity pared off dramatically, while crowdfunding increased in activity. Now that Issuers can raise more under Reg CF in ways that keep their cap tables clean (see below), crowdfunding is competing more aggressively with traditional capital channels than ever before.
Crowdfunding vs. Venture Capital
Entoro subsidiary Entoro Securities (member FINRA and SIPC) is a fully-licensed and registered broker-dealer in all 50 states and the District of Columbia. This means that, unlike many non-B-D CF portals, Entoro is permitted to explicitly recommend and promote your raise to investors, and to directly solicit investments, as opposed to merely creating a listing for your raise on our platform.
Our Reg CF experts can connect you with powerful media and publishing groups to facilitate a successful capital raise
Our technology platform, OfferBoard® is a leading securities offering platform that can enhance and promote your issuance. Due to Entoro’s years of experience conducting Reg D (accredited investor-only) private placements, we have thousands of institutional, family office and high net worth/accredited account holders. These capabilities are further supplemented through strategic partnerships as well as other Independent Broker-Dealer relationships.
Reg CF Issuers are required to provide a company valuation with their raise. Our affiliated entity, Clear Rating, provides third-party valuation reports to make your raise compliant, and offers streamlined reports for Reg CF Issuers at competitive rates.
Recent regulatory changes have made it possible for Issuers to pool retail investors into a single entity, supporting a clean cap table for Issuers. However, this process requires creation of a special purpose entity to house that pooled capital. Entoro can establish and manage the legal entities necessary to achieve this aggregation in a compliant fashion.
Reg CF Equity Crowdfunding
Title III of the JOBS Act, commonly referred to as Seed Equity Crowdfunding, allows startups to raise up to $5 million in seed capital under expanded equity crowdfunding rules. This regulation enables both accredited and non-accredited investors globally to purchase shares in your company. The level of disclosure required varies with the amount raised, with key thresholds at $124,000, $618,000, and $1.235 million.
In many cases, audited financial statements are necessary, and you should also anticipate marketing expenses to promote your offering to investors. These costs can range from $10,000 to $60,000, depending on the marketing strategy and execution. Marketing costs cannot be tied to a percentage of the capital raised, so agencies must charge a flat fee. However, reaching non-accredited investors—especially if your company has strong consumer appeal—can be significantly more cost-effective than targeting accredited investors.
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